If you run a small business, you’ll want to keep costs and overheads as low as possible. One of the best ways to do this is to ensure you’re not paying more than you should for your energy bills.
Why should my business switch energy provider?
If your business hasn’t switched energy provider for a number of years, you could be overpaying on your gas and electricity bills by hundreds of pounds annually. That’s a lot of money to be throwing away, but fortunately it’s easy to switch energy suppliers and move on to a better deal.
To get switching, you will usually need to wait until your existing contract has come to an end so that you don’t get stung by high early exit fees. As soon as your contract enters its ‘renewal’ window (your supplier will let you know when this is), you’re free to start comparing what else is available and line up a more competitive tariff to switch to.
If you don’t switch, you’ll be placed on what’s known as an ‘out-of-contract’ rate which will be more expensive, so it’s best to move on to a new contract before this happens.
If you run your business across a number of different premises, you may also be able to negotiate a more competitive deal through a multi-site energy contract. This type of contract allows you to combine all of your business energy tariffs into one package with one supplier, making it far more manageable and often saving you money too.
How long does it take to switch?
Switching business energy contracts usually takes between four and six weeks. Your new supplier should work with your existing supplier to take care of the switch and inform you of the switching date.
Your gas and electricity will still be supplied through the same pipes and cables so there will be no drilling or digging at your workplace, inside or out, and no disruption to your energy supply.
How much do small businesses pay for energy?
The cost of a business energy contract can vary depending on a range of factors, including the type of business you run, the amount of gas and electricity you use, when your business uses most of its energy (eg. day or night), and your business location.
If you’re a micro business using up to 15,000 kWh of electricity a year, your annual cost will be in the £1,000 region, and you can probably add up to £400 or so for 10,000 kWh of gas.
A ‘small’ business could expect to double those figures, while a medium-sized one using up to 50,000 kWh of electricity and 30,000 kWh of gas could have respective bills of £3,000 and £1,400.
Is my business an SME or micro business?
The UK currently defines an SME as a small or medium-sized enterprise with fewer than 250 employees. The EU also uses this definition but adds that an SME has a turnover of less than €50 million or a balance sheet of less than €43 million.
Within this umbrella, there are three categories, as follows:
- a medium-sized business has fewer than 250 employees and either a turnover of less than €50 million or a balance sheet of less than €43 million.
- a small business has fewer than 50 employees and either a turnover of less than €10 million or a balance sheet of less than €10 million.
- a micro business has fewer than 10 staff and either a turnover of less than €2 million or a balance sheet of less than €2 million.
Note that your business may also be classed as a micro business if you use less than 100,000 kWh of electricity each year or less than 293,000 kWh of gas each year.
What if I work from home?
If you work from home you may qualify for a business energy tariff but note that most suppliers require a minimum of 50% of the total energy used at the address to be for business purposes.
If you are confident your business meets this requirement, a business energy contract may be worth considering as the cost per unit of energy will be lower than a domestic tariff, but you’ll need to check whether the difference in VAT you pay on your bills will erode any of these savings. Businesses usually pay 20% VAT, rather than the 5% charged on domestic tariffs.
What’s more, you may be liable to pay the Climate Change Levy, unless you find a green business tariff.
What should I do if I can’t pay my energy bills?
If you have received an energy bill you can’t afford to pay and you think the bill is wrong, it’s important to call your supplier as soon as possible and ask how it has been calculated. If the bill is correct, but you can’t afford to pay it, ask if you can arrange a payment plan.
If you’re in debt with your supplier, it’s vital that you speak to your supplier quickly and come to an alternative arrangement to ensure your business’s energy supply is not disconnected.
Should you need further help, you can contact the Citizens Advice consumer helpline on 0808 223 1133 Monday to Friday 9am to 5pm.
